Keeping British manufacturing competitive
As a purchaser of steel I have always paid attention to news about the UK and global steel markets. We are competing with many international chain companies and supplying a number of companies that want us to be globally competitive; we also have a good level of export sales. But with steel making up a significant part of our cost, it is important that our purchasing does not put us at too much of a disadvantage. A few years ago we unsuccessfully attempted to buy from Tata Steel; in the end we could not agree on something that worked commercially.
We make safety critical parts, meaning the quality and consistency of the steel we buy is very important. We have always specified European-made steel. The majority of the steel we use in our UK factory is made by a Scandinavian producer, and while price plays an important part in our decision, even more important is repeatability of machinability from cast to cast. This is becoming increasingly important, as we are introducing more automation and unmanned running to increase productivity.
If you put China’s steel to one side, we must ask ourselves: ‘why can’t we have a competitive steel industry against other European producers?’ At the core of this is a lack of actions and strategy over many years to support UK manufacturing, which employs 2.6 million people.
UK manufacturers have higher electricity prices than they do in many of Britain’s European neighbours; between 2005 and 2014, the average price for industrial consumers in Europe increased by 66%. But prices also vary significantly across the EU. In Germany and the Netherlands, prices have remained fairly stable, increasing by approximately 25%. In the United Kingdom and Poland, however, prices have gone up by as much as 100%.
Business rates are based on a system dating back to 1572. In 2014-15, the Government collected a total of £22.9 billion in business rates, representing just 3.53% of the total UK tax income. It’s a strange fact that investments in certain types of plant and machinery result in an increase in the rateable value, and therefore the business rates. We need a fundamental reform of business rates for all – whether that be small, medium-sized or larger businesses – to encourage companies to invest in equipment.
UK manufacturing needs more skilled workers. As a small company, we have worked hard to include apprenticeships in our development plan. Our experience with local colleges has been quite disappointing so far, and the new funding model linked to the apprentice levy seems overly complicated. Training and staff development must be about more than just apprentices – why can’t we have 100% tax relief for all training and staff development?
Unfortunately, we can’t rewrite history, but there are many things we can change to ensure we have a fighting chance against other European manufacturers. After that, we have to make sure we’re in a good position to compete with the rest of the world.